Sunday 20 April 2008

Land values (1)

AnEnglishmansCastle has alerted me to an article in The Scotsman: "Size will matter as Greens plant the seeds of garden tax".

The headline does complete disservice to the article itself. As with many things, the clue is in the name: Land Value Tax is a tax on land values, not on land itself.

So let's go back to basics and look at actual land values:

Prime central London - £1 billion for 12.8 acres = £16,000 per sq yd.
Outer London - if I deduct rebuild costs per ABI Calculator from what we sold our house for recently and divide it by the plot size = £1,000 per sq yd.
Typical residential land in England & Wales (excl. London) -£2.91 million per hectare = £240 per sq yd.
Agricultural land - £4,316 per acre = 89 pence per sq yd.

So the type of land you own is far more relevant than the size of your garden. One sq yd of prime central London = 16 sq yds of outer London = 67 sq yds of typical England & Wales = 18,000 sq yds of farmland.

I invite visitors to find out the market value of their home, deduct rebuild costs and divide it by the plot size. It would be interesting to build up a contour map for different parts of the country.

3 comments:

Anonymous said...

Is our kitchen garden agricultural land? (A covenant on the land forbids us to build on it.) Would it be if we kept a goat or a few chookies? Should I pursue my pipedream of growing truffles under the trees at the front?

Mark Wadsworth said...

If the covenant depresses the value, then it has a low value. It's the value that matters, not whether it's "agricultural" or not. But a similar covenant on the surrounding land increases the value of your land.

Joshua Vincent said...

We run into this issue in our land value tax towns in the USA all the time.

For instance, in Allentown, Pennsylvania, one man complained about LVT, as he owned several acres (2.5 if I remember) of land that he could not build upon as it was squarely in a 10-year flood plain.

The result? His tax went from about$45US a year to $300 a year; a great deal since he had enough land from the road and the neighbors to play lord of the manor.

In any event, he went to the local valuer, and got his land assessment (or value) lowered dramatically. because of the the restrictions placed on his land use. His taxes then went DOWN to about $125 a year.

The biggest challenge to LVT is the perception that land size equals land value. It should be simple for people to grasp, but...